The change in tone in the equity markets is unmistakable: There is a palpable tension that leads some money managers to shoot first and ask questions later. The net result of that anxiety can be seen in the flood of new money into U.S Treasuries, which ever so briefly drove the yield on the 10 year to less than 2% on Wednesday.

Certainly, fund managers can hide in fixed income, but only for so long.

What caused this shift?

The macro folks call out their favorites: Fed taper! European weakness! Pricey stocks! ISIS! Soft retail sales! Plummeting oil! Slowing China! Even the dreaded Ebola Virus! gets the blame in some quarters.

These are all well-known. There isn’t one single surprise on that list. In fact, many of these macro issues have been on the radar for more than a year. Why now?

The change in tone isn’t the result of any headline or news story. Rather, it more likely reflects the shift in balance between supply and demand for equities. I hope my repeating this doesn’t seem boorish, but what is going on beneath the headlines is far more important than the headlines themselves.

So what is happening beneath the surface?

The selloff actually began late in 2013, as the small-cap growth stocks were finishing a torrid 12 months. The Standard & Poor’s 500 Index had notched an impressive 30% gain in 2013, while the Russell 2000 was up even more at 37%. The growth index of the Russell did even better, a scorching 43%.

As we have noted before, too far too fast is often met with a long period of digestion, waiting for the economy and earnings to catch up with the market prices. That can happen by going sideways, which is what the net of the 2014 trading range has essentially yielded. Or, the excesses can be worked off through prices going lower. Which is the fear of the long-only, fully invested crowd.

It’s been a great ride since the lows of March 2009. Those that were lucky enough to jump on board enjoyed a few years of relatively easy money. My strong suspicion is that period is over. The sledding gets much more challenging from here. It isn’t that there may not be more upside; it’s that whatever upside there is will be trickier than what’s come before as the post-quantitative-easing era unfolds. The math, this is simple: This bull market is long in the tooth at more than 5 1/2 years old. It hasn’t suffered a 10% pullback since October 2011.

But the big caps are the last to leave the party. The small-cap stocks have already been shellacked. As a group, they fell below their 200-day moving average and many of its members have declined significantly.

Lowry’s Research looks at how many stocks are lower than their 52-week highs by 20% or more as a sign of market breadth. Lowry’s points out that as of the end of September, almost 40% of the companies in S&P 600 small-cap index were more than 20% lower than their highs. That’s up from less than 15% at the start of the year and less than 25% at the end of the second quarter.

The mid-cap stocks are also beginning to show signs of similar decay. A bit less than 20% of the companies in the S&P 400 mid-cap index are 20% or more off their highs. That’s up from only 10% since the beginning of the year. The same pattern is emerging among the large caps.

But something interesting happened Wednesday: The big-caps and mega-cap stocks took the worst beating. The small-caps and mid-caps actually held up relatively well. This suggest those parts of the market are at a bottom and teed up for some sort of bounce in the not-too-distant future.

The next bounce should provide some insight as to that supply-demand battle mentioned earlier. Was the change the result of temporary factors, or has something changed on a more permanent basis?

That’s the most challenging question since the March 2009 rally began. Has this cyclical rally run its course, and we are now reverting to the bear market that started in 2000? Or, are we merely looking at pause following a hot year within a longer bull market?

We won’t know the answer until afterward, but I have been moving toward the secular bull-market camp. But that’s a 10- to 15-year timeline, and the day to day or even week to week is meaningless to these investors.

Traders are aware that a bounce won’t mean that the risk of more declines is over. Nor will further selling mean that the bull market is over.

All we know with some measure of confidence is that the easy money has most likely already been made. Things are going to get even more interesting and challenging from here.

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